Tuesday, December 9, 2008

Applications for MBA programs are up, but job opportunities for second-year students in finance or consulting have turned wretched

By Alison Damast of Business Week

After nearly four years as a management consultant at such firms as Deloitte Consulting and Booz Allen Hamilton, Ari Perlman was itching to try his hand at investment banking. So this summer the 26-year-old MBA student at the University of Virginia's Darden School of Business signed on with Lehman Brothers for an internship. Then all hell broke loose. With the economy unraveling and much of Wall Street seemingly on the brink of collapse, Lehman slashed bonuses for interns. And by the time Perlman returned to campus, the company had filed for bankruptcy. Lehman's last check for Perlman's travel expenses? Bounced. An e-mail explained that a new check would be in the mail. Eventually. "I haven't heard anything from them since," says Perlman, who's now looking for a consulting job. "And frankly, I am not too hopeful."

On the nation's B-school campuses, hope used to spring eternal. No more. Students like Perlman are downsizing their expectations, rejiggering career plans, and settling for less as the cascading effects of the global financial crisis start to be felt at MBA programs around the country. With companies pulling back on second-year recruiting and competition for the few remaining finance jobs becoming fierce, students are entering what surely is the toughest MBA job market since the dot-com bust. "I think next fall is going to be very, very difficult," says George G. Daly, dean of Georgetown University's McDonough School of Business. "This is terra incognita."

Despite the gloomy outlook for current students, applications to B-schools are on the upswing, driven largely by applicants who have been laid off or are otherwise hoping to ride out the recession. With more applicants to choose from, admissions officers can be pickier, making 2009 a difficult year to land a slot at a top B-school. Meanwhile, professors and deans are attempting to make sense of the financial crisis in the classroom, offering new electives and town-hall-style meetings on the meltdown, altering syllabi, and writing new case studies based on recent market-churning events. Risk management, until recently an unpopular elective, is expected to become a more important part of many B-schools' curriculums in three to five years, a trend that Robert Meyer, co-director of the Risk Management & Decision Processes Center at the University of Pennsylvania's Wharton School, calls "potentially transformational."

For current students, though, the only concern is finding a job—and nowhere is that dream receding faster than on Wall Street. Brian Mirochnik, 26, an MBA student at the University of Rochester's Simon Graduate School of Business, is facing that reality head-on as he looks for jobs in the investment banking field. He didn't receive a job offer from UBS (UBS) after his summer internship and now is scrambling to find a position, a search he fears could easily stretch into the spring. "Banks are telling me they are going through their own layoffs and don't know when they are going to start hiring again," says Mirochnik, who has given up on the big Wall Street firms and is looking exclusively at boutique investment firms and mid-market banks. "A lot of the factors affecting my future employment are just out of my hands."

Second-year students such as Mirochnik without job offers appear to be in the most precarious position. According to a survey by the umbrella group MBA Career Services Council, about 70% of the 77 schools surveyed said they saw a downturn in full-time recruiting opportunities in financial services in October. Meanwhile, about half of the schools said overall full-time job postings and on-campus recruiting this fall was either flat or down 5% during the same period, with some indicating it has fallen as much as 10%.

In the coming year, the job market for MBAs may begin to bear a striking similarity to the period following the dot-com bust when some banks and consulting firms rescinded or renegotiated job offers they had extended to second-year students. That hasn't happened this time around—yet.

But many are worried that the situation could change if the economy drifts into a deep and prolonged recession. "The dot-com meltdown was horrific," says Georgetown's Daly. "This has not reached those levels, but I expect it to."

SWITCHING TRACKSWith investment banking the hardest hit, many students are abandoning hope for Wall Street careers and pursuing jobs in consulting instead. At New York University's Stern School of Business—where about 40% of every class typically goes into investment banking—attendance at recruiting presentations by consulting firms has been standing room only, says Gary Fraser, Stern's dean of students, who oversees the office of career development. Attendance at interview preparation sessions offered by the management consulting club is up about 80% this fall. And some consulting companies are noticing a jump in applications from students who have done an about-face on Wall Street. Says Nikki Rath, the senior manager of campus recruiting and diversity initiatives at Booz & Co.: "We have definitely seen an increase in résumés that had a lot of banking on them."

But consulting may not be the haven many think it is. For one thing, the rush of finance students to consulting will make consulting jobs that much more difficult to land. With more students seeking consulting jobs, each one is likely to get fewer offers, making big signing bonuses unnecessary. Tom Rodenhauser, vice-president of consulting at Kennedy Information, which tracks the consulting industry, isn't optimistic. He says top students will get two or three offers this year, down from six in good years. Signing bonuses will dip to $20,000 or lower. The worst-case scenario? A student could receive a token bonus of $5,000 or none at all. Meanwhile, expectations are that 2009 will be a challenging year for many consulting firms as companies determined to trim costs cut back on discretionary projects.

EXPECTED EXPLOSIONAll the bad news for B-school students has turned out to be good news for B-schools, which tend to do brisk business when the economy falters. Already, admissions officers say they are experiencing double-digit increases in applications for 2009 and increased interest from students. So far this year, the University of Chicago Booth School of Business has seen a 20% increase in attendance at information sessions worldwide and a surge in U.S. applications, says Rosemaria Martinelli, associate dean for student recruitment and admissions. At the University of Notre Dame's Mendoza College of Business, applications are up 20% from last year and admissions interviews are up 50%.

Meanwhile, worldwide registration for the Graduate Management Admission Test—a required standardized test for business school applicants and a leading indicator of future B-school applications—was up 16% in September from the same four-week period in 2007. The current surge in registration volume is similar to one that followed the bursting of the dot-com bubble, which led to an explosion in B-school applications about a year later. This time, the impact on applications is expected to be even more pronounced, since the downturn is not limited to a single industry. Says Dave A. Wilson, president and chief executive of the Graduate Management Admission Council, which administers the exam: "You are going to see a good surge in application volume next year, and maybe into the tail end of 2010."

Wherever they end up, those new applicants will find a B-school landscape in many ways transformed by the events of the past 18 months. While long-term curriculum shifts may take a few years, students can expect to encounter new classes, new case studies, and a new emphasis on risk. Much of this has already begun, with a growing number of business schools planning to add concentrations in risk management in coming years, ramping up the number of classes they offer and starting new risk management centers. Wharton's Meyer, also a professor at the University of Miami School of Business, is setting up such a center there this fall and predicts that others will soon follow suit.

At the same time, faculty are revising course descriptions and incorporating discussion of recent events in their classes. At Harvard Business School, professors Clayton Rose and Daniel Bergstresser are writing a case study examining JPMorgan Chase (JPM)'s hastily arranged takeover of Bear Stearns. They plan to teach the case to first-year students this spring in a class called "Leadership and Corporate Accountability." Rose says he is also working on two other case studies, one on Lehman and another examining investor Warren E. Buffett's $5 billion investment in Goldman Sachs (GS). "There are many lessons in financial management and strategy that will come out of this last year and a half and will probably extend into the future," he says. "These are big policy issues, so there will be plenty to write about and reflect on." NYU is adding a class on the Great Depression. One theme: How reforms implemented in the wake of that crisis may have contributed to this one.

At Georgetown, James J. Angel, an associate professor of finance, has already introduced an elective this fall titled "The Changing Structure of Financial Markets: Financial Crises Past, Present and Future." The class was so popular that 95 students registered for the 65 available seats. "In many ways, I felt like a geologist teaching a class about earthquakes," says Angel, who tore up his syllabus several times as turmoil in the financial markets rewrote history. "When the big one hits, the first instinct is, 'Wow, that's cool,' and the second one, you say, 'Oh no.' "

Saturday, October 11, 2008

Fresh M.B.A. grads, especially those working for large banks, say they are living in a climate of fear.

"I feel lucky that I still have a job at this point because I've seen so many people lose them," said Deepa Pai, who recently obtained her master's degree from Northwestern University, and now works for Bank of America in New York, the company that bought Merrill Lynch as the credit crisis was unfolding.

As this type of upheaval became commonplace on Wall Street, a dicey reality emerged for young M.B.A.s. Read more on Wall Street's job woes.

"A lot of people are looking for a job whether they have one or not because they don't know what's going to happen with banks and the economy," Pai said. "I feel like the [job] recruiting process didn't end."

Turmoil in the stock market and decreased opportunities at big banks directly affect a lot of classic M.B.A. career paths, according to Steven Goodwin, an independent Washington-based education and career-strategy specialist.

He said he's received a surge of phone calls from nervous workers who obtained degrees over the past few years. Many of these former students are forced to broaden their job search and lower their standards, a move labor economists say trickles down and strikes people at the lowest rung of the ladder.

In general, students who settle for a lower position during an economic downturn rarely make up the financial differences in the long term, according to Lisa Kahn, a Yale University economist who studies the intersection of employer practices and external labor market factors. M.B.A.s are a unique subset of these students because most of them worked for several years before going back to school.

While it's too soon to tell how many people's career hopes have been dampened by the Wall Street crisis, it's likely that many M.B.A.s who wanted to work in the financial sector took jobs elsewhere -- or don't have a job at all. These individuals will have a lower financial trajectory over the course of their lifetimes, Kahn said.

"I definitely thought that getting out [into the working world] would be a time to focus on making long-term connections at the bank," Pai said. "But now I think I just need to focus on what I can do over the next six months to make sure I don't get laid off."

There is a small silver lining. "The people who do survive this in the banking sector will have a promising career," Pai said.

Monday, October 6, 2008

The stratospheric pay packages of Wall Street executives have become a lightning rod issue as Congress shapes a $700 billion bailout for financial firms. Proposals circulating on Capitol Hill vary, but they all would impose some limits or approval authority on salaries of executives whose firms seek help.

The moves in Washington mirror the popular outcry — in constituent e-mail messages and postings in the blogosphere — over the prospect of Wall Street’s tarnished titans walking away with tens of millions of dollars a year while taxpayers pick up the bill.

But Wall Street, its lobbyists and trade groups are waging a feverish lobbying campaign to try to fight compensation curbs. Pay restrictions, they say, would sap incentives to hard work and innovation, and hurt the financial sector and the American economy.

“We support the bill, but we are opposed to provisions on executive pay,” said Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, a trade group. “It is not appropriate for government to be setting the salaries of executives.”

Sunday, October 5, 2008

Executive M.B.A. programs make a big promise: They'll turn up-and-coming managers into full-fledged leaders, showing them how to think strategically, inspire their staff and expand the business.

So, which schools do the best job of delivering on that bold talk? That's what we set out to measure in The Wall Street Journal's first survey of executive M.B.A. programs.

Working with Management Research Group and Critical Insights, we asked thousands of students and hundreds of companies to rank executive M.B.A. programs in a host of categories, with a focus on how well they develop management and leadership skills. The result is a ranking of 25 schools world-wide that takes into account the rigor needed to build tomorrow's corporate leaders and C-suite executives.

Topping the list: Northwestern University's Kellogg School of Management, which ranked No. 1, and the University of Pennsylvania's Wharton School, which came in No. 2. The two schools have among the largest E.M.B.A. programs, with 406 students currently enrolled in Wharton's two programs and 843 candidates in the seven Kellogg programs, including four international partnerships and a satellite campus in Miami.

What set Kellogg and Wharton apart? The schools got high marks from companies -- nearly double those of their nearest competitors -- which gave them a clear lead overall. And those stellar grades far outpaced their lower marks from students.

Kellogg and Wharton were ranked at the top more often by companies by a wide margin over their competitors. What's more, corporate scores varied the most in our surveys, with the leaders outpacing the middle of the pack, and the middle schools leaving the laggards far behind. That variation and wide lead shifted the overall rank in favor of Kellogg and Wharton.

In contrast, student survey scores showed less variation. Kellogg, for example, which ranked No. 15 in the student survey, had a score much closer to that of the leading schools. In a few cases, like that of the No. 1 school in the student ranking, the University of North Carolina's Kenan-Flagler Business School, a school's student score was strong enough that the school made the top five.

In all, we surveyed 4,060 students and recent grads from 72 executive M.B.A. programs at 53 business schools in nine countries on how well their program enhanced leadership and management skills; 62% responded.

We also surveyed 455 human-resources and executive-development managers at companies across 23 industries, on the value of the education provided by E.M.B.A. programs. More than 200 officials completed the survey, for a response rate of 44%.

Last, we looked at how well the programs met employers' and graduates' expectations when it came to enhancing their management acumen. We measured what employers wanted out of the programs -- largely, improved management and leadership skills such as managing change and strategic thinking. Then we asked students how well their programs delivered those skills, and weighted their responses to arrive at a final score for the 2008 ranking.

Saturday, October 4, 2008

The grim outlook for the labor market has been leading more workers to reassess their career options. And it's tempting many to contemplate a return to school to buff up skills or gain completely new ones.

More education can add significantly to earnings, according to a report from the Census Bureau. In 2006, among workers 18 and older, those with less than a high-school diploma earned an average of $20,873, compared with $31,071 for those with a high-school diploma, $56,788 for a bachelor's degree, and $82,320 for a master's, professional or doctoral degree.

While such financial incentives may be alluring, experts say there are a number of important considerations that must be taken into account before pouring hard-earned cash into more schooling:

Determine Your Strengths and Weaknesses. Figuring out whether you need to go back to school should involve a self-assessment to determine what skills you already have and how you can build upon them to nab a job, experts say.

"Put together a picture of what you are good at and what you would like to do," says Deborah Russell, director of work-force issues at AARP. "If there is a skill gap, the next piece is to figure out where to get those skills."

It's also important to determine whether acquiring new skills will require taking just a course or two, or earning an entire degree. And workers should make sure to factor in family and social responsibilities, Ms. Russell adds.

Those with tight schedules may want to consider taking online courses, or immersion courses that are more intensive but last for a shorter period than a traditional course.

"Going back to school may look very different to different people," she says. "There may be caregiving obligations that may preclude you from taking courses during the day or evening."

Also keep in mind that a decision should be future-oriented, taking into account what employers will be looking for in coming years in addition to skills that are currently in demand, says Ronald Ferguson, an economist and lecturer in public policy at Harvard University's Malcolm Wiener Center for Social Policy.

"There are lots of different ways to arrive at estimates of what the future is likely to bring," he says. "Some combination or understanding of the current market and of what informed sources have to say about future demand would be prudent."

Find Local Demand. Try to find out which types of employees and skills are needed in your community, experts say.

Ms. Russell says you can start by asking career counselors at community colleges, as well as checking out state and local career centers. "Having a better understanding of your local community is more important than looking at it from a national level," she adds.

Once you know which skills are needed, you can tailor your education. More schools are cooperating with local employers to offer courses that suit workplace training needs, Ms. Russell says.

"Local training entities are much more in tune with developing training that corresponds to demands that employers have," she adds.

"Do some homework," he says, "to be sure that the skills [you] would be acquiring are both in demand and sufficiently compensated to make the time and effort and expense worth it."

Start by figuring out how much you are likely to spend. For the 2007-2008 academic year, in-state tuition and fees averaged about $6,200 at public four-year institutions, and about $23,700 at private four-year nonprofit institutions, according to the College Board.

Unless a degree is necessary, workers may be better off financially if they take just a course or two or pursue a certificate program.

And make sure to take advantage of low-cost or free offerings from community colleges, local groups and employers, such as programs teaching basic computer skills. An extension class might cost a couple hundred dollars or less.

Prospective students also should keep in mind that student loans may be harder to come by these days given recent credit-market problems, says Mark Kantrowitz, publisher of FinAid.org, a Web site offering financial-aid information.

"Lenders have tightened criteria," he says. "If you have a bad or marginal credit score, you are going to have a harder time obtaining a student loan."

Friday, October 3, 2008

Top U.S. business schools canceled the admissions-test scores of 84 applicants and students -- including two enrolled at the University of Chicago and one who has graduated from Stanford University -- who allegedly supplied or accessed live exam questions posted on a Web site.

In June, the Graduate Management Admission Council, which represents the business schools and oversees the GMAT admissions test, obtained a federal court order that shut down the Web site Scoretop.com and won a $2.3 million judgment against its operator. The site had been selling questions from recent exams to subscribers who paid a $30-a-month subscription. The operator of the Web site, believed to be in China, didn't defend itself in court, and it wasn't known where any representatives could be reached.

The latest episode has rattled the schools, and it comes as they have been trying to increase security.

The business-school council recently announced that it would require those taking the GMAT to undergo a "palm vein" scan, which takes an infrared picture of the blood coursing through their hands. Officials said it was designed to wipe out "proxy" test taking, in which applicants hire high-scoring imposters to take the exam for them. Previously, the administrator had used digital fingerprinting. Five years ago, federal authorities broke up a ring of six fraudsters who took more than 590 exams, including GMATs, for customers who paid at least $3,000.

Donald L. McCabe, a Rutgers University professor of management, has surveyed 200,000 students over 19 years and concluded that those in business school cheat more than those in other disciplines.

Prof. McCabe said schools will have to evaluate the evidence against each student they had admitted with canceled test scores. But he said business schools have "got to do something" to protect their programs' integrity, though he suspects "some may tend to whitewash it and do something mild.'

Judy Phair, a spokeswoman for the admissions council, said a computer hard drive seized through court proceedings found 5,000 to 6,000 subscribers to the Scoretop Web site. But the group decided to cancel scores only of those "against whom we felt we have airtight cases," Ms. Phair said. In many cases, she said, it wasn't clear the students had used the service or knew that they were improperly gaining access to current questions.

Ms. Phair said her group had evidence that 12 students whose scores were canceled actually posted questions themselves. In those cases, which she said the organization considered a theft of intellectual property, the students won't be eligible to retake the test for at least three years, effectively keeping them out of business school for that period.

The other 72 students wrote a message on Scoretop confirming that they had seen items on their GMAT exams. Those students will be allowed to take the exam again. The admissions council also recently notified schools about their determination that these students had prepared improperly for the exam.

The business-school group didn't identify the students or the schools where they applied or enrolled. Representatives at several business schools said their administrators would consider penalties, including expulsion, in such cases.

Two of the students who acknowledged viewing live questions -- but not the more serious category of posting the questions themselves -- are currently enrolled at the University of Chicago's business school, said Rosemaria Martinelli, the school's associate dean for student recruitment and admissions. Ms. Martinelli said Chicago is considering action against the students, but "we haven't decided anything."

Stanford's business school said scores of 11 applicants had been canceled. Ten of them were denied admission, and one had already graduated. The school said it will meet with the student "to discuss this situation," Derrick Bolton, Stanford's MBA admissions director, said in a statement. If any applicant reapplies, he or she, "at minimum," will have to supply an explanation. He urged that those whose scores were canceled "might learn from the experience by reflecting on their actions and taking ownership for their errors, then sharing those explanations and insights with us."

Representatives at the business schools of Columbia, Dartmouth, Harvard, the Massachusetts Institute of Technology and Yale said they had no students enroll with the tainted test scores. In an email, Peter Winicov, a spokesman for the Wharton School at the University of Pennsylvania, said officials were still "analyzing the situation are not yet prepared to discuss next steps."

Showing how much the scandal has shaken some in business school, Dartmouth's Tuck School of Business plans to hold an "ethics fireside chat" this month on campus to discuss the Scoretop cheating scandal, including officials from the business-school council.

About 4,000 business programs at 1,800 universities, including most top-ranked institutions, require the GMAT for admission. The business school council gives 230,000 tests annually and charges $250 for each exam.

Tuesday, September 30, 2008

As Wall Street tries to survive the credit crunch, business schools are planning their own rescue plans: tinkering with their curricula and preparing students for a different job landscape.

“Our advice to them is that this will pass,” says Joseph Baczko, dean at Pace University's Lubin School of Business in New York City. “We’ve gone through this before,” he says, referring to other crises like the 1987 stock market crash.

If tumultuous market swings weren't enough in recent weeks, Wall Street has undergone structural changes that are likely to shrink the number of jobs available to future business school graduates.

Investment banks Goldman Sachs and Morgan Stanley have opted to become bank-holding companies, while others—Merrill Lynch, Lehman Brothers and Bear Stearns—have either been bought up or filed for bankruptcy protection.

As a result, many schools are working to reduce the anxiety their student's are feeling by re-evaluating the curriculum and helping students navigate the gloomy job market.

At the Villanova School of Business, in Villanova, Pa., Dean James Danko sent a letter to all business school students on Friday Sept. 19, 2008; the end of a week that saw Lehman Brothers file for chapter 11 bankruptcy protection, Merrill Lynch agreed to a takeover by Bank of America and AIG receive an $80-billion federal rescue package. The letter encouraged students to meet with career services and to investigate “different career paths, industries and companies.”

That thinking was evident at other schools as well. Take Dean Van Tassell, 27, a senior in the MBA program at Pace.

“I’m starting to develop a contingency plan,” he says acknowledging that his dream job on a trading desk may be even harder to attain in this market. He's now also seeking opportunities in other areas like corporate finance and portfolio management.

Villanova dean Danko said the school is working with a more diverse group of companies looking to recruit business students including teen clothing retailer American Eagle Outfitters, conglomerate General Electric (the parent company of CNBC and CNBC.com) and British engine maker Rolls-Royce.

Ed Fredericks, a professor at Pepperdine University’s Graziadio School of Business and Management in Malibu, Calif. says that areas of growth for newer grads will be in smaller “boutique firms.” He recommends students intern over the summer to improve their chances of landing a job upon graduation.

That was the case for Andrew DeVries, 29, a senior in the MBA program at Emory University's Goizueta Business School in Atlanta, Ga., who was recently offered a job at a Wall Street firm he interned at over the summer.

"Most of the banks seemed to strictly [hire] out of their summer classes," says DeVries.

Graduates may have another reason for optimism. “They’re cheaper than the older talent,” says Baczko.

Cheaper indeed. The credit crunch has hurt entry level pay and starting bonuses more than during other downturns. Sign-up bonuses are lower because there’s more people in the job pool, says Van Tassell, who’s now actively job hunting. “They aren’t competing for labor right now.”

Curriculum Changes

In addition to helping students navigate the new job market, many schools say they are shifting the curriculum so that students graduate with a broader business background.

Emory's business school has done that and more, while Villanova now offers a combined finance and accounting course that exposes students to both fields.

Change and challenges aside, schools say they are not expecting a drop in applications. “The classic situation is that when certain sectors go down people look to sharpen their skills,” says Baczko.

In fact, many have seen an increase this year as the economy stumbled. A survey conducted by the Graduate Management Admission Council, an association of graduate business schools around the world, shows that 77 percent of full-time MBA programs reported an increase in applications in 2008, the highest in five years.

In the testing year ending June 30, 2008, the GMAT, the standardized test used to get into MBA programs, was administered 246,957 times, the highest ever, according to GMAC. The second highest year the test was administered was in 2002, the time of the last downturn.

Some, however, are seeing signs of a shift away from business schools.

Lisa Jacobson, CEO of Inspirica, a high-end, one-on-one test preparation firm says many of her students are changing plans and opting for law school, which happened during other slumps. The joke is they’ll be busy doing bankruptcy work, she says.

Monday, September 29, 2008

(Note: This is a very old article. But it's still very useful to those seeking job on Wall Street.)

If you're a college or business school student or if you're thinking about a career change, what can you do to prepare to enter the highly competitive world of finance?

I've mentored students from my college and business school, and I've been on both sides of the interview table about 1,000 times over the last 17 years. I've distilled that experience into a handful of factors that separate success from failure, which I'll present today along with some practical advice and resources for the aspiring financier.

Artists Need Not Apply

The primary function of finance is to facilitate the workings of the economy, to be the grease that oils the wheels of progress. Finance is suitable for people whose primary objective is to make a decent (although not necessarily outrageous) income and don't mind working 60 to 100 hours a week on sometimes numbingly dull work. People who have an aptitude for math, computer programming and games such as bridge, backgammon and poker do very well.

Finance is not suitable for people who are creative in the traditional sense (e.g., artists) or interested in the "caring" professions (teachers, doctors). In fact, when I used to do interviews for Morgan Stanley, we were specifically instructed to weed out those personality types. Furthermore, people who want to produce tangible products (software, automobiles) will also find Wall Street frustrating.

Sell Side vs. Buy Side

Firms are oriented either to the sell side or the buy side. Sell-side firms are what people traditionally think of when looking for Wall Street jobs. These firms underwrite securities and advise on mergers and acquisitions through their corporate finance divisions. Their sales and trading divisions make secondary markets in a variety of securities, including stocks, bonds, currencies, swaps, commodities and derivatives. Analysts in research divisions make both macro (overall investment strategy) and micro (company-specific) recommendations. There are entry-level jobs in all three areas, often straight out of company training programs.

Sell-side firms tend to be household names; buy-side firms tend to be less well known. Sell-side firms have higher salaries and higher turnover (i.e., more firings). Both buy- and sell-side firms have analysts (people who study investments) and traders (people who actually buy and sell the securities). Buy-side firms have portfolio managers, who make broad investment decisions. Sell-side firms have proprietary traders, who invest the firm's own capital.

There are also boutique firms (the Quantum Fund, Wasserstein & Perella, the Blackstone Group) that are highly focused on one activity, such as mergers and acquisitions or proprietary trading. Entry-level jobs in these houses are rare.

Sell-side firms tend to hire hyperactive people; buy-side firms are more laid-back. This reflects the fact that the sell-side firms take bigger risks and turn capital over faster. Buy-side firms are investing for a generation out in pension plans and the like.

Making the Cut

Getting a job on Wall Street is a very arduous process. Hundreds of people compete for each trading or corporate finance job, going through multiple screens and interviews along the way. Each screen and interview is designed to weed out prospects. Many years ago, when I was an associate at Morgan Stanley, we used candidates' SAT scores to cut 10,000 college student resumes down to 500. Four-year-old SATs were not relevant to anything Morgan Stanley was doing with new hires, but we needed some way to get a handle on the onslaught of applications.

Keep in mind that each resume receives a review averaging 18 seconds. So whatever talents you have, make sure they'll be seen at even the most cursory glance.

Educational Experience

People with degrees in mathematics and hard sciences have an edge. I have not seen any particular advantage to people with business, accounting or economics degrees -- these people tend to have specialized too early. I was a dual history/mathematics major, which turned out to be an excellent education, even though all my work since 1983 has been in using computers to implement investment strategies. Everything I know about computers or investment products I learned on the job. It was my analytical skills and ability to communicate these skills enthusiastically during the interview process that got me the job in the first place.

An MBA or law degree is required about 90% of the time if you want to advance beyond the level of senior associate in corporate finance. A higher degree is required about 50% of the time in sales and trading. These degrees are less certifications of ability than they are screens to limit the number of people seeking higher positions. On the buy side, having an advanced degree is a requirement nearly 100% of the time.

Look carefully into getting a CFA (chartered financial analyst) designation. This is a very challenging three-year series of exams. Just saying you're studying for CFA Level 1 is very impressive in a job interview. If you are enrolled in a first-year MBA program, I recommend taking the first level next June. (Level 1 covers first-year accounting, economics and finance.) More information is available at the Association for Investment Management and Research Web site.

Experience

Any job demonstrating independent thinking, creativity, entrepreneurship or risk-taking will help. I once hired a candidate who started out as a party DJ, and by senior year had bought a bunch of equipment that he leased to other DJs in the area, thus multiplying his income. Frankly, I thought he would be bored working for an investment bank, but he was keen on the job. Three summers working as a lifeguard is not going to have much impact, by comparison. Involvement in varsity sports, especially if the candidate was a team captain or a recognized important player, always makes a big impression. Most other extracurricular activities, like the student government or the campus newspaper, are of marginal value if the other criteria are not satisfied.

Finding Out About Companies

During my job search in college, on-campus presentations by companies were the most useful in learning generalities. In this era, it would be inexcusable not to visit a company's Web site to review career information, company history and so on. Obviously, there are vast volumes of information specific to these companies available over the Internet. Alumni contacts can be the most useful, but also the hardest to set up. (I prefer phone dates to meeting face to face -- they're easier to schedule.)

Start Early

Anything you can do to demonstrate you've thought long and hard about Wall Street early on is going to give you an edge.

You should start no later than fall of your junior year of college or fall of the first year of business school to develop contacts for a summer internship that will hopefully set you up for a job after graduation.

Get in the habit of skimming, in descending order of importance, The Economist, Barron's, Forbes, The Wall Street Journal, Investor's Business Daily and Institutional Investor. There are a host of trade magazines worth reading, but most are very expensive to subscribe to (some will be available in a business school library). Watch CNBC for an hour a day, listening particularly for the language of Wall Street. Why does this matter? Often interviewers will test you by throwing out buzzwords. If they perceive you have no idea what they're talking about, the interview usually goes against you.

Take one macro- and one microeconomics course somewhere in your college career. Also take writing, public speaking and computer science and accounting courses, and math, at least through multivariate calculus. Wall Street firms want to be assured that you won't be stumped by a little math.

Sunday, September 28, 2008

The day after Lehman Brothers Holdings Inc. said it would file for bankruptcy-court protection, University of Chicago's Graduate School of Business career office had already made personal calls to all of their 26 alumni from the 2008 class who worked at the firm.

One former student volunteered to become the representative for the group and scheduled a conference call to discuss future career strategies with the business school, says Stacey Kole, deputy dean for the full-time program, which sent 20% of its 504 alumni hired to investment banks in 2007. By Friday, career-office representatives flew to New York to have dinner with 14 of the Lehman 2008 graduates to help them figure out a plan. Ms. Kole said they are ready to meet any demand. "We're like a tennis player on their toes," she says.

With the Bear Stearns meltdown this spring already affecting alumni, career offices were bracing for a tough recruiting year and the possibility of more layoffs and jobless alumni to come. Schools were largely unprepared for the onslaught of grads looking back to their alma maters for job help when the Wall Street woes began.

But many have used the summer to find ways to step up, in some cases sending career-service officials to check out the situation and adding extra services. And with the start of recruiting season around the corner, schools are providing additional help to current students as well.

At Columbia Business School, 2008 graduates who left school in May will continue to get access to several student databases and personalized counseling sessions from the Career Management Center, says Michael Malone, director of career education and advising. It's proved time consuming: "At this point we are not quite to the level of investment banking hours, but we are earning our keep," says Mr. Malone of the long hours he's putting in helping displaced alums.

The University of California-Berkeley Haas School of Business, is also extending invitations to its New York-based alumni for several career workshops hosted by Columbia, says Nicole Gerhmann, assistant director of M.B.A. recruiting for financial services and energy at Haas. Typically 5% to 10% of the about 240 students a year, pursue careers on Wall Street. Additionally, Rich Lyons, the dean of the business school and a former chief learning officer at Goldman Sachs, is visiting New York this week and will meet with alumni.

Schools are also working harder to support current students. At Cornell's Johnson School of Business, a former dean and four former associate deans have volunteered to meet for advising appointments with interested students who now see their career paths changing. Most schools, though, stress the same message -- expand your options. "There are many investment banks in other cities throughout the country -- not everything is in New York," says Karin Ash, the director of the career-management center at Cornell. Traditionally, about 50% of business students at Cornell end up working in finance in New York. Next month, Cornell's career services is organizing a panel with 2002 alumni who will talk about finding employment in the last recession, says Ms. Ash.

Career office staff members are also trying to steer undergrads to alternative careers. Patricia Rose, director of career services at the University of Pennsylvania, deals with undergraduate business students along with students in other majors. Typically, Wharton sends about 50% of its undergraduates into investment banking. Ms. Rose says she's recommending Wharton students look into technology or public-service jobs, which are more plentiful than coveted finance jobs. "We are encouraging students to think more broadly," she says.

Other schools like the University of Chicago used the summer to plan ahead. After it became clear that Wall Street hiring would be off for interns and for the class of 2009, the career office reached out to boutique and middle-market firms like William Blair & Co. and Perella Weinberg Partners to beef up finance recruitment, says Ms. Kole. "We sat down face-to-face with [people] at firms that are healthy and growing and implored them to think about their current hiring," says Ms. Kole.

The result? There are 40 new finance-related firms slated to come to Chicago's campus; they probably will be looking for one or two key recruits -- not the 20 or so grads a typical large investment bank hired at the school in the past. But Chicago officials hope the number of new recruiters will make up for the smaller volume.

Interest in banking among current students is already down. Typically, more than 50% of the nearly 700-person graduating M.B.A. class at Columbia head into finance jobs -- more than half of that group working in investment banking and brokerage. But, the day of the Lehman news, at an annual event called "Day in the Life of an Investment Bank" -- which included much-touted networking opportunities for first-year M.B.A. students -- attendance was down nearly 35% over years past.

At the University of North Carolina Kenan-Flagler School of Business, about 50 M.B.A. students are expected to make an annual visit to Wall Street this fall, instead of the 70 or so who made the trek in previous years, says Brandan Lingle, a second-year M.B.A. student who is organizing the trip.

Many students are even hesitant to search within the banking industry at all, says Al Catrone, career services director at the University of Michigan Ross School of Business. "In a typical downturn the students will kind of clamor to us in career services and ask us to find other companies. ... This time around it's been so deep that students aren't even asking," says Mr. Catrone.

Saturday, September 27, 2008

As the latest crisis on Wall Street unfolds, recruiters say their phones are ringing off the hook with anxious finance professionals on the line.

The sale of Merrill Lynch & Co. and the bankruptcy-court filing of Lehman Brothers Holdings Inc. have prompted workers from those firms to launch immediate job searches. Recruiters say newly displaced finance professionals should consider other types of employers or fields, and consider opportunities at smaller banks -- which are ramping up hiring right now.

Case in point: On Monday, the number of ads at WallStJobs.com for positions at small and middle-market firms shot up by more than 25%, says Robert Graber, chief executive officer of the New York-based job site. Most of the ads were from small and midsize investment banks and hedge funds that are "taking advantage of the turmoil to attract candidates who would normally only move to large institutions," Mr. Graber says. "They almost seem poised to acquire the newly available talent that's out there."

So far this year, the financial sector has announced the largest number of job cuts, roughly 103,000 positions, followed by the auto industry, reports Challenger, Gray & Christmas Inc., a global outplacement consultancy. These losses mainly reflect downsizings at top-tier investment banks. In contrast, many small and middle-market banks, as well as employers specializing in other parts of the financial-services industry, say they are expanding and are eager to capitalize on the sudden outpouring of job hunters.

Among those employers is Gerstein, Fisher & Associates Inc., an independent advisory firm in lower Manhattan with plans to nearly double its 25-person work force over the next 12 months. "This is the biggest opportunity we've ever had," says Gregg S. Fisher, president and chief investment officer, of the flood of high-level, quality candidates who might consider a small firm. He is looking for people who have strong skills in business development, relationship management, analysis, research, trading and operations. "We've been really untouched by all the stuff we're hearing about," he says.

There is a potential downside to moving to a smaller firm. "Typically, initial cash compensation will be lower at smaller firms; however, there is often a greater opportunity to negotiate equity," says Deborah Markus, executive director at Gerson Group, an executive-search firm. There may be more of a salary setback for more junior employees, particularly if they change functions in the new role.